Market Rap 17 September 2009

After some investigative journalism in the windy city last night, I find myself back in the office looking at the final scores. The S&P closed off 3.27 points at 1065.49. Spot gold sits at 1,012.20/oz. Trade was relatively tame today. Technically, there wasn’t much change in the short term bullish outlook on US stocks.

Sports Television

On business television this morning, there was an in depth discussion whether Corona beer is good with or without a lime. As business TV gains market share, the likelihood it attracts sponsorship from the major brewing companies becomes more certain.

The 20% Above Buy Signal

There was also mention that the S&P is 20% above it’s 200 day moving average. A historical study was presented and viewers were assured that this is a sign of strength. The market remains overbought but it remains tough to be short stocks here. However, I’d be cautious viewing this stat as a buy signal. No two periods in history are the same, and our history is built by surprises.

The Dollar

Dennis Gartman of The Gartman letter commented that the “gold trade is crowded, but you can’t be short of it.” I agree. If the dollar suddenly catches a bid, gold is vulnerable to a quick move lower. As time goes by and the dollar trades lower (equities higher) we become more and more vulnerable to a treasury intervention. In the currency markets, the key is to catch traders off guard. Robert Rubin did this in the 1990’s. A sudden spike in the dollar would come as a surprise to most — and the surprise factor could be a catalyst for other news.